- Commercial real estate?
- Vacation property?
- Flipping houses?
- Strategic locations?
Using 400k as down payment gives you at least 2mil buying power. There will always be expenses so keep the 100k for that. Build a partnership and the sky's the limit.
Make sure you do the math on expenses and payback period so you'll know your approximate holding period. The problem is that there are many people looking to do the same and bargains are hard to find. It's a lot of work.
Up and coming neighborhoods are probably your best bet. Think gentrification. Great for investors. Sucks for current residents. Always look at the neighborhood and try to project its future.
Stay way from real estate stocks. They are great on the way up -no work, all gains. But on the way down, they'll have to liquidate or go bankrupt leaving you very little protection.
BTW, a big chunk of the real estate billionaires are developers that bought, developed and held for 20-30 years. It's not a business where you need lots of brains but you need lots of patience and sweat equity. FU wealth comes with time and even multiple generations. So the goal is to get to a point where you can meet your expenses and have a nice living ASAP, wait and then go for the ride to wealth. Be ready for multiple ups and downs in real estate. Building relationships helps a lot. There's a reason why the rich have so many parties. It's a way to keep relationships with people you wouldn't otherwise see. Good Luck!
1. In some markets to buy some property that can be actively managed.
2. Pay off a home mortgage and improve cash flow...which is probably a good consideration when thinking about real estate investing.
3. Speculate in (more or less) an "all my eggs are in one basket" sort of way on anything from houses to commercial property to raw land.
4. Place the capital at substantial risk via leverage to create a larger portfolio...but still probably not enough to create a passive investment.
In regard to flipping houses, the money is not just in getting the house at a discount. It is also in getting the improvements at wholesale cost rather than retail (or doing the work ones self). It also helps if the property can be acquired and sold in a manner that one avoids or receives or reduces real-estate commissions because 7% of $500k is real money when it is your money.
Likewise 10% contractor overhead + 10% contractor profit on $100k worth of construction is real money when it is your money. There is a reason the stars of the home flipping shows usually have contractor licenses. They also use the same crews and have relationships with businesses in the various trades. To make real money, house flippers need a continuous deal flow. It's not part time work.
If it were me, I would probably sit on it and wait for an opportunity that clearly appeared to be well above average. That means understanding at least one particular market really well and being very patient and financially conservative. Basically, it is a recognition that I am going up against professionals as an amateur and with the intent of making money more or less passively. There are lots of other businesses with better cash flow if I am actively participating.
Good luck.
I've now sold the Scottish flat and I'm looking to rent somewhere where I am right now. Instead of having a two-bedroom flat all I can afford to buy outright in my current location is a small 25 square meter place - literally one room with a separate shower/toilet room.
On the one hand I can see this would be perfect for a student, and I know they will rent happily. On the other hand I just can't imagine living in such a small place myself.
I can buy a semi-detached house further away, or even two for the same money. It's very tempting because those properties are much nicer, but of course the downside is that renting them would be significantly more difficult. Especially having two rather than one.
So it's a trade-off I'm investigating: Small place in heart of the city, vs house in the countryside, or family-home beneath an airport. Tricky.
The only downside is that you have roommates now, so choose carefully!
My friend bought a house and build an independent area for renting. Basicly he turned it into a duplex. That's an alternative way to go.
There's nothing anti-capitalist about investing to protect wealth and benefit society.
Not sure about your tax laws but here it's usually best to borrow 100% and chuck your cash on your primary residence mortgage first ideally via offset then the rest offsetting the investment loan.
In that sense it may make sense to spend the money upgrading the primary residence and pull equity out for the deposit on the investment so there is a 100+% loan to maximise tax deductions. That's if you are aiming for capital growth and can stomach the lack of cashflow of course.
I wish you the very best.
https://www.occ.gov/topics/community-affairs/publications/in...